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October 23, 2013

Electric rate increase possible for Duncan Power customers

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DUNCAN —

Council tables resolution

Duncan City Council members have two weeks to make a decision regarding a resolution to increase Duncan Power electric rates.

And from the discussion that took place during Tuesday’s regular meeting, members will more than like adopt the resolution out of necessity for the City of Duncan. Members tabled the resolution until the Nov. 12 regular meeting.

“It’s always difficult to ask for a rate increase of any kind,” City Manager Jim Frieda said. “We are not a recipient of ad valorem taxes. We depend on the sale of the electric utility.”

Frieda said several rate increases have been passed down to the City of Duncan this year, including one from the Southwestern Power Administration and another soon to come from the Oklahoma Municipal Power Authority.

He said the city has absorbed some of these rate increases for months, but it’s becoming more difficult for the city to continue to do so. Instead, if the resolution is adopted, customer bills will reflect these rate increases for November and December.

“We are not a utility company with stock,” Frieda said. “We are not trying to make a profit for our stockholders.”

Two representatives from OMPA attended the meeting to inform the city council of why the rate increases are occurring. David Osburn, OMPA general manager, said the municipal power group is experiencing several costs coming on all at once, which is why Duncan Power is experiencing rate increases.

“It’s unfortunate I have to discuss these rate increases in my first time at this council meeting,” Osburn said. “I hate to use this analogy, but it’s a perfect storm. We have a lot of things hitting all at the same time.”

Among the costs accrued by OMPA are the final debt payment for a coal plant, improvement to the coal plant to react to emissions, investment in the coal plant, Southwest Power Pool, transmission system, paying a pipeline company.

“Rates went up a fair amount,” Osburn said. “The rates are still competitive. Those items impacted our fixed costs. More and more is depending on natural gas prices.”

Council members spoke to needing the rate increases, although they will also be paying for those increased costs. Councilman Ricky Mayes wanted to put it to a vote, but Mayor Gene Brown and Frieda told him it would be better to wait two weeks to better inform customers.

“We want people to see the necessity of a rate increase,” Frieda said about tabling the item. “Putting it off two weeks will fall into the bill cycle for November.”

 

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